In its newest quick time period vitality outlook (STEO), which was launched on Might 12, the U.S. Power Info Administration (EIA) widened its world oil deficit projection for 2026.
Based on its Might STEO, the EIA sees world petroleum and different liquid fuels consumption outweighing manufacturing by 2.56 million barrels per day this yr. In its earlier STEO, which was launched in April, the EIA projected that world petroleum and different liquid fuels consumption would outweigh manufacturing by 0.30 million barrels per day this yr.
In its newest STEO, the EIA forecasts that the deficit will are available in at 8.47 million barrels per day within the second quarter of 2026 and 4.42 million barrels per day within the third quarter, earlier than flipping to a glut, whereby manufacturing outweighs demand, of 1.99 million barrels per day within the fourth quarter.
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The EIA’s earlier STEO noticed a glut rising earlier. In that STEO, the EIA projected that the oil market can be in a deficit of 5.09 million barrels per day within the second quarter, earlier than being oversupplied by 0.29 million barrels per day within the third quarter and three.16 million barrels per day within the fourth quarter.
2027, the EIA’s newest STEO predicts a glut of three.86 million barrels per day for the yr. That is bigger than the 2027 glut of three.31 million barrels per day projected within the EIA’s earlier April STEO.
The EIA’s Might STEO sees an oil glut of three.88 million barrels per day within the first quarter of 2027, 3.30 million barrels per day within the second quarter, 3.55 million barrels per day within the third quarter, and 4.69 million barrels per day within the fourth quarter. In its April STEO, the EIA projected a glut of three.71 million barrels per day within the first quarter of subsequent yr, 2.87 million barrels per day within the second quarter, 2.89 million barrels per day within the third quarter, and three.78 million barrels per day within the fourth quarter.
Again in its March STEO, the EIA was predicting a glut of 1.87 million barrels per day in 2026 and three.00 million barrels per day in 2027.
The EIA highlighted that its newest STEO assumes that the Strait of Hormuz reopens in late Might. It additionally identified that its newest forecast consists of the U.S. Strategic Petroleum Reserve launch introduced on March 11 and the collective launch of strategic shares introduced by the Worldwide Power Company.
“We estimate that world oil inventories will fall by a median of 8.5 million barrels per day in 2Q26, pushing Brent crude oil costs to a median of round $106 per barrel in Might and June,” the EIA famous in its Might STEO.
“As soon as the visitors by means of the Strait of Hormuz step by step begins to renew in June and shut-in oil manufacturing step by step returns, we assume oil costs will start to fall, lowering to a median of $89 per barrel by 4Q26 as world oil stock withdrawals reduce,” it added.
“We assess that the majority shut-in oil manufacturing might be totally restored by January 2027 and that world oil inventories will once more begin constructing, serving to oil costs step by step decrease to a median of $79 per barrel in 2027,” it went on to state.
The EIA highlighted in its Might STEO that world oil markets “are in a interval of heightened volatility and uncertainty as a result of de facto closure of the Strait of Hormuz”, which it described as “a significant world oil transit chokepoint by means of which practically 20 p.c of worldwide oil provide flowed previous to navy motion that started on February 28”.
“The strait has been successfully closed to transport visitors since,” the EIA stated.
In its April STEO, the EIA famous that, previous to the battle, its evaluation was that the worldwide oil market was oversupplied and that world oil inventories have been constructing shortly, “which was mirrored in steadily falling oil costs over the earlier yr”.
“We anticipated this development to proceed over the subsequent two years, as robust progress in manufacturing from each non-OPEC+ producers and elevated manufacturing targets from OPEC+ international locations outpaced progress in world oil demand,” the EIA added in that STEO.
“Nevertheless, the battle in Iran has shortly shifted market dynamics, as producers within the area have been compelled to close in vital volumes of oil manufacturing, resulting in near-term tightness out there,” it went on to state.
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